E.ON to cut jobs to reduce debts after record 2016 loss
E.ON (EONGn.DE) will shed assets and cut 1,300 jobs to reduce its 26-billion euro (22.65 billion pounds) debt pile, it said on Wednesday, after reporting its biggest-ever net loss, one of the biggest in German corporate history.
The record loss and expectations the energy group will soon make a decision on whether to sell new shares to raise money for nuclear waste provisions hit its stock price, which was down 2.5 percent by 1247 GMT.
E.ON said its 16 billion euros net loss for 2016 was partly because of major impairments on conventional power plants that are now bundled in Uniper (UN01.DE), which E.ON spun off last year.
“This complete break with the past left deep marks on our balance sheet and equity. But from a balance-sheet perspective, it really is a clean break,” Chief Executive Johannes Teyssen told reporters at the group’s annual press conference.
Teyssen is hoping to draw a line under years of losses and address shareholder pressure over his decision to break up the company in response to the rise of renewable energy and a drop in power prices.
The group’s decision to spin off fossil fuel based-plants and energy trading last year and rebrand it Uniper has been less well received than a plan by rival RWE (RWEG.DE) to float its healthy assets – renewables, networks and grids.
E.ON’s shares were the biggest decliners among German blue-chips .GDAXI, with traders pointing to the looming capital measures flagged by the group, which could include a sale of new shares representing up to 10 percent of its current share capital.
Shares in Uniper, in which E.ON still holds 46.65 percent, were down 1.2 percent.
E.ON said it planned to reduce its debt to about 20 billion euros over the medium-term, compared with 26.3 billion at the end of 2016, by selling further stakes in Uniper and shifting its stake in the Nord Stream 1 pipeline to its pension fund.
Other measures include selling off further stakes in Uniper from 2018 as well as other non-strategic businesses, E.ON said. The group also pointed to a scrip dividend and optimising costs for nuclear decommissioning as measures that will also reduce debt.
E.ON will cut annual costs by 400 million euros by 2018, an effort that will result in 1,300 job cuts, amounting to about 3 percent of its total workforce, it said, adding it also reduced its investment budget by a fifth.
E.ON proposed a dividend of 0.21 euros per share for 2016, in line with the average forecast in a Reuters poll, and said it planned a fixed payout of 0.30 euros per share for 2017.
($1 = 0.9415 euros)
Article Source: http://uk.reuters.com/article/uk-e-on-results-idUKKBN16M0MNl